SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2003.
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------- -------------
Commission File No. 33-31013-A
ISLANDS BANCORP
----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
SOUTH CAROLINA 57-1082388
------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
2348 Boundary Street, Beaufort, SC 29902
---------------------------------------------------------------
(Address of Principal Executive Offices)
(843) 521-1968
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
N/A
------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common equity as of the latest
practicable date.
Common stock, no par value per share, 652,705 shares outstanding as of
November 11, 2003.
Transitional small business disclosure format (check one):
Yes No X
---- ----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
------- --------------------
ISLANDS BANCORP
BEAUFORT, SOUTH CAROLINA
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS September 30, December 31,
- ------ 2003 2002
----------- ----------
Cash and due from banks $ 726,782 $ 394,484
Federal funds sold 622,000 - -
----------- -----------
Total cash and cash equivalents $ 1,348,782 $ 394,484
Securities:
Available-for-sale, at fair value 2,569,348 1,334,763
Loans, net 24,188,084 18,872,582
Property and equipment, net 2,969,741 2,858,610
Other assets 474,095 559,591
----------- -----------
Total Assets $31,550,050 $24,020,030
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Deposits
Non-interest bearing deposits $ 3,230,602 $ 1,563,515
Interest bearing deposits 22,056,558 16,926,102
----------- -----------
Total deposits $25,287,160 $18,489,617
FHLB advances 1,000,000 - -
Federal funds purchased - - 308,000
Other liabilities 155,426 88,529
----------- -----------
Total liabilities $26,442,586 $18,886,146
----------- -----------
Commitments and contingencies
Shareholders' Equity:
Common stock, zero par value,
10,000,000 shares authorized,
652,705 shares issued and
outstanding $ 6,213,061 $ 6,213,061
Retained deficit (1,092,172) (1,086,429)
Accumulated other comprehensive income (13,425) 7,252
----------- -----------
Total Shareholders' Equity $ 5,107,464 $ 5,133,884
----------- -----------
Total Liabilities and
Shareholders' Equity $31,550,050 $24,020,030
=========== ===========
Refer to notes to the consolidated financial statements.
ISLANDS BANCORP
BEAUFORT, SOUTH CAROLINA
CONSOLIDATED STATEMENTS OF OPERATION (UNAUDITED)
FOR THE THREE-MONTHS ENDED
September 30,
-------------------------
2003 2002
---------- ----------
Interest income $ 470,216 $ 295,079
Interest expense 141,186 101,019
--------- ---------
Net interest income 329,030 194,060
Provision for loan losses 27,709 35,680
--------- ---------
Net interest income
after provision for loan losses $ 301,321 $ 158,380
--------- ---------
Service charges on deposit accounts $ 47,725 $ 22,793
Other income 5,106 399
--------- ---------
Total other income $ 52,831 $ 23,192
--------- ---------
Salaries and benefits $ 170,914 $ 148,908
Depreciation expense 36,005 15,219
Data processing 26,764 22,304
Rent expense 1,000 12,825
ATM machine expense 5,976 2,871
Advertising and public relations 2,994 7,673
Utilities and telephone 7,802 4,883
Legal and professional 12,267 11,114
Other operating expenses 41,546 32,526
--------- ---------
Total other expenses $ 305,268 $ 258,323
--------- ---------
Net income before taxes $ 48,884 $ (76,751)
Income tax expense 17,763 (28,484)
--------- ---------
Net income $ 31,121 $ (48,267)
========= =========
Basic income per share $ .05 $ (.07)
========= =========
Diluted income per share $ .05 $ (.07)
========= =========
Refer to notes to the consolidated financial statements.
ISLANDS BANCORP
BEAUFORT, SOUTH CAROLINA
CONSOLIDATED STATEMENTS OF OPERATION (UNAUDITED)
FOR THE NINE-MONTHS ENDED
September 30,
-------------------------
2003 2002
---------- ----------
Interest income $1,270,481 $ 709,799
Interest expense 429,215 205,429
--------- ---------
Net interest income 841,266 504,370
Provision for loan losses 73,113 104,996
--------- ---------
Net interest income after
provision for loan losses $ 768,153 $ 399,374
--------- ---------
Service charges on deposit accounts $ 127,547 $ 54,774
Other income 7,701 1,286
--------- --------
Total other income $ 135,248 $ 56,060
--------- --------
Salaries and benefits $ 497,668 $ 429,339
Depreciation expense 106,338 46,764
Data processing 80,831 65,699
Rent expense 1,000 38,475
ATM machine expense 19,956 22,914
Advertising and public relations 8,578 18,847
Utilities and telephone 21,392 13,165
Legal and professional 46,606 33,450
Other operating expenses 130,817 99,887
--------- --------
Total other expenses $ 913,186 $ 768,540
--------- --------
Net (loss) before taxes $ (9,785) $(313,106)
Income tax (benefit) (4,042) (118,749)
--------- --------
Net (loss) $ (5,743) $(194,357)
========= ========
Basic (loss) per share $ (.01) $ (.30)
========= ========
Diluted (loss) per share $ (.01) $ (.30)
========= ========
Refer to notes to the consolidated financial statements.
ISLANDS BANCORP
BEAUFORT, SOUTH CAROLINA
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the nine-month
period ended September 30,
----------------------------
2003 2002
------------ ------------
Cash flows provided by
operating activities $ 339,601 $ (7,934)
----------- -----------
Cash flows from investing activities:
Purchase of securities $ (2,015,957) $ (600,000)
Maturities, calls, paydowns, securities 747,195 415,523
Increase in loans (5,388,615) (9,204,355)
Purchase of fixed assets (217,469) (1,044,822)
----------- -----------
Net cash used in investing activities $ (6,874,846) $(10,433,654)
----------- -----------
Cash flows from financing activities:
Increase in deposits $ 6,797,543 $ 11,833,788
Increase in borrowings
and in federal funds purchased 692,000 (1,000,000)
----------- -----------
Net cash provided
from financing activities $ 7,489,543 $ 10,833,788
----------- -----------
Net increase in cash
and cash equivalents $ 954,298 $ 392,200
Cash and cash equivalents,
beginning of period 394,484 464,139
----------- -----------
Cash and cash equivalents,
end of period $ 1,348,782 $ 856,339
=========== ==========
Refer to notes to the consolidated financial statements.
ISLANDS BANCORP
BEAUFORT, SOUTH CAROLINA
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2003
Accumulated
Common Stock Other
------------------ Compre-
No. of Common Retained hensive
Shares Stock (Deficit) (Loss) Total
------ --------- -------- ------ -----
Balance,
December 31,
2001 652,705 $6,213,061 $ (848,572) $ (515)$ 5,363,974
--------- --------- ---------- --------- ----------
Comprehensive income:
- ---------------------
Net loss,
nine-month
period ended
Sept 30, 2002 -- -- (194,357) -- (194,357)
Net unrealized
loss on securities,
nine-month
period ended
Sept 30, 2002 -- -- -- (904) (904)
--------- --------- ---------- --------- ----------
Total
comprehensive
income -- -- (194,357) (904) (195,261)
--------- --------- ---------- --------- ----------
Balance,
Sept 30,
2002 652,705 $6,213,061 $(1,042,929) $ (1,419)$ 5,168,713
========= ========= ========== ========= ==========
- -------------------------------------------
Balance,
December 31,
2002 652,705 $6,213,061 $(1,086,429) $ 7,252 $ 5,133,884
--------- --------- ---------- --------- ----------
Comprehensive income:
- ---------------------
Net loss,
nine-month
period ended
Sept 30, 2003 -- -- (5,743) -- (5,743)
Net unrealized
loss on securities,
nine-month
period ended
Sept 30, 2003 -- -- -- (20,677) (20,677)
--------- --------- ---------- --------- ----------
Total
comprehensive
income -- -- (5,743) (20,677) (26,420)
--------- --------- ---------- --------- ----------
Balance,
Sept 30,
2003 652,705 $6,213,061 $(1,092,172) $ (13,425)$ 5,107,464
========= ========= ========== ========= ==========
Refer to notes to the consolidated financial statements.
ISLANDS BANCORP
BEAUFORT, SOUTH CAROLINA
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2003
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310
of Regulation S-B promulgated by the Securities and Exchange Commission.
Accordingly, they do not include all the information and footnotes required
by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting only
of those of a normal recurring nature) considered necessary for a fair
presentation have been included. Operating results for the three-month and
nine-month periods ended September 30, 2003 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2003.
These statements should be read in conjunction with the financial statements
and footnotes thereto included in the annual report for the year ended December
31, 2002.
NOTE 2 - SUMMARY OF ORGANIZATION
Islands Bancorp (the "Company") is a one-bank holding company with
respect to Islands Community Bank, N.A., Beaufort, South Carolina (the
"Bank"). The Company was incorporated July 23, 1999, and its principal
operations commenced when the Bank opened for business on July 9, 2001. The
Bank is engaged in the business of gathering and obtaining customers'
deposits and providing commercial, consumer and real estate loans to the
general public.
NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS
In December 2001, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 01-6, "Accounting by Certain Entities
(Including Entities With Trade Receivables) That Lend to or Finance the
Activities of Others." SOP 01-6 reconciles the specialized accounting and
financial reporting guidance in the existing Banks and Savings Institutions
Guide, Audits of Credit Unions Guide, and Audits of Finance Companies Guide.
The SOP eliminates differences in accounting and disclosure established by the
respective guides and carries forward accounting guidance for transactions
determined to be unique to certain financial institutions. Adoption of this
pronouncement has not had a material impact on the Company's results of
operations or financial position.
In October 2002, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 147, "Acquisitions of Certain Financial Institutions," which addresses
accounting for the acquisition of certain financial institutions. The
provisions of SFAS No. 147 rescind the specialized accounting guidance in
paragraph 5 of SFAS No. 72 and would require unidentifiable intangible assets to
be reclassified to goodwill if certain criteria are met. Financial institutions
meeting the conditions outlined in SFAS No. 147 will be required to restate
previously issued financial statements after September 30, 2002. The adoption
of SFAS No. 147 has had no material impact on the Company's results of
operations or financial position.
In December 2002, FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure," which amended SFAS No. 123,
"Accounting for Stock-Based Compensation" to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based compensation. In addition, this statement amended the
disclosure requirements of SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the chosen method on
reporting results. The provisions of SFAS No. 148 are effective for annual
periods ending December 15, 2002, and for interim periods beginning after
December 15, 2002.
In November 2002, FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." It addresses the accounting for the
stand-ready obligation under guarantees. A guarantor is required to recognize a
liability with respect to its stand-ready obligation under the guarantee even if
the probability of future payments under the guarantee is remote. The initial
liability will be measured as the fair value of the stand-ready obligation.
Additionally, the Interpretation addresses the disclosure requirements for
guarantees including the nature and terms of the guarantees, maximum potential
for future amounts and the carrying amount of the liabilities. The disclosure
requirements are effective for interim and annual financial statements ending
after December 15, 2002. The initial recognition and measurement provisions are
effective for all guarantees within the scope of Interpretation 45 issued or
modified after December 31, 2002. Commercial letters of credit and other loan
commitments, which are commonly thought of as guarantees of funds were not
included in the scope of interpretation. The Company has made relevant
disclosures in the current year financial statements. The Company does not
expect the adoption of Interpretation No. 45 to have a material impact on its
financials.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS.
----------------------
Total assets increased by $7.5 million, from $24.0 million at December
31, 2002 to $31.5 million at September 30, 2003. More specifically, cash and
cash equivalents increased by $.9 million, from $.4 million at December 31,
2002 to $1.3 million at September 30, 2003; securities increased by $1.3
million, from $1.3 million at December 31, 2002 to $2.6 million at September
30, 2003; loans increased by $5.3 million, from $18.9 million at December 31,
2002 to $24.2 million at September 30, 2003; property and equipment increased
by $.1 million, from $2.9 million at December 31, 2002 to $3.0 million at
September 30, 2003; and all other remaining assets decreased by $.1 million,
from $.6 million at December 31, 2002 to $.5 million at September 30, 2003.
To fund the growth in assets, deposits increased by $6.8 million, from $18.5
million at December 31, 2002 to $25.3 million at September 30, 2003; federal
funds purchased decreased by $.3 million, from $.3 million at December 31,
2002 to no federal funds purchased at September 30, 2003; FHLB advances
increased by $1.0 million from zero at December 31, 2002 to $1.0 million at
September 30, 2003; and the capital accounts remained virtually unchanged
at $5.1 million at both December 31, 2002 and September 30, 2003.
LIQUIDITY AND SOURCES OF CAPITAL
- --------------------------------
From its inception until July 6, 2001, the Company's operations were
funded primarily through loans and other borrowings. On July 6, 2001, the
Company received approximately $6.2 million from the sale of its common stock
to the public. Soon thereafter, the Company injected $6.0 million into the
Bank's capital accounts and used the majority of the remaining funds to pay-
off debt it had incurred during the development stage. The Bank, in turn,
also paid-off debts associated with its organizational costs, the purchase of
its facilities, and the purchase of its furniture and equipment.
Liquidity is the Company's ability to meet all deposit withdrawals
immediately, while also providing for the credit needs of customers. The
September 30, 2003 financial statements evidence a satisfactory liquidity
position as total cash and cash equivalents amounted to $1.3 million,
representing 4.3% of total assets. Investment securities, which amounted to
$2.6 million, or 8.1% of total assets, provide a secondary source of
liquidity because they can be converted into cash in a timely manner. The
Bank is a member of the Federal Reserve System and maintains relationships
with several correspondent banks and, thus, could obtain funds from these
banks on short notice. The Company's management closely monitors and
maintains appropriate levels of interest earning assets and interest bearing
liabilities, so that maturities of assets can provide adequate funds to meet
customer withdrawals and loan demand. The Company knows of no trends,
demands, commitments, events or uncertainties that will result in or are
reasonably likely to result in its liquidity increasing or decreasing in any
material way. The Bank maintains an adequate level of capitalization as
measured by the following capital ratios and the respective minimum capital
requirements by the Bank's primary regulator, the OCC.
Bank's Minimum required
September 30, 2003 by the OCC
------------------ ----------------
Leverage ratio 17.0% 4.0%
Risk weighted ratio 22.1% 8.0%
RESULTS OF OPERATIONS
- ---------------------
For the three-month period ended September 30, 2003, net income
amounted to $31,121, or $.05 per both basic and diluted share. For the
three-month period ended September 30, 2002, net loss amounted to $(48,267),
or $(.07) per both basic and diluted share.
Note that the results for the three-month period ended September 30, 2003
signify the Company's second quarterly profit since it began its principal
operations on July 9, 2001. This trend in income is positive as the Company
is improving its economies of scale and is able to narrow its cumulative
losses.
Below are specific details concerning results of operations for the
three-month periods ended September 30, 2003 and 2002:
(a) Net interest income increased from $194,060 for the three-month period
ended September 30, 2002 to $329,030 for the three-month period ended
September 30, 2003. The main reason for the above increase centers
on the fact that average earning assets have increased by $11.9
million, from $12.7 million (2002) to $24.6 million (2003.
(b) Non-interest income for the three-month period ended September 30,
2003 amounted to $52,831, while during the three-month period ended
September 30, 2002 non-interest income was only $23,192. As a percent
of average assets, non-interest income has increased from .61% for the
three-month period ended September 30, 2002 to .76% for the three-month
period ended September 30, 2003. The increase in non-interest income
is primarily due to a higher volume in transactional items.
(c) Non-interest expense has increased from $258,323 for the three-month
period ended September 30, 2002 to $305,268 for the three-month period
ended September 30, 2003. As a percent of average assets, however, non-
interest expense has declined from 6.76% for the 2002 period to 4.29%
for the 2003 period. The above results indicate that while expenses
are growing, the Company is achieving higher levels of efficiency.
(d) During the September 30, 2002 calendar quarter, the Company booked
$28,484 in income tax benefits, while during the quarter ended September
30, 2003, the Company recorded a tax expense of $17,763.
For the nine-month period ended September 30, 2003, net (loss) amounted
to $(5,743), or $(.01) per both basic and diluted share. For the nine-month
period ended September 30, 2002, net (loss) amounted to $(194,357), or $(.30)
per both basic and diluted share. Below are specific details concerning results
of operations for the nine-month periods ended September 30, 2003 and 2002:
a. Interest income, which represents interest received on interest earning
assets, increased from $709,799 for the nine-month period ended September
30, 2002 to $1,270,481 for the nine-month period ended September 30, 2003,
an increase of $560,682. The cost of funds, which represents interest paid
on deposits and borrowings, increased as well, from $205,429 for the nine-
month period ended September 30, 2002 to $429,215 for the nine-month period
ended September 30, 2003, an increase of $223,786. Because the growth in
interest income during the nine-month period ended September 30, 2003 out-
paced the increase in the cost of funds, net interest income grew from
$504,370 for the nine-month period ended September 30, 2002 to $841,266 for
the nine-month period ended September 30, 2003.
Net interest yield, defined as net interest income divided by average
interest earnings assets, decreased from 5.30% during the nine-month
period ended September 30, 2002 to 4.55% during the nine-month period ended
September 30, 2003. The decline is due to two factors: (i) rates in
general have declined in the past year, and (ii) capital, a "free" source
of funds for the Bank represented 25.1% of the total sources of funds at
September 30, 2002, while it represented only 16.2% at September 30, 2003.
Below is pertinent information concerning the yield on earning assets and
the cost of funds for the nine-month period ended September 30, 2003.
(Dollars in '000s)
Avg. Assets/ Interest Yield/
Description Liabilities Income/Expense Cost
----------- ----------- -------------- ------
Federal funds $ 834 $ 7 1.12%
Securities 2,250 56 3.32%
Loans 21,549 1,207 7.47%
------ ----- ----
Total $24,633 $1,270 6.87%
====== ----- ----
Federal funds $ 1,210 $ 12 1.32%
Transactional
accounts 4,146 47 1.51%
Savings 366 3 1.09%
CD's 16,151 367 3.03%
------ ----- ----
Total $21,873 $ 429 2.62%
====== ----- ----
Net interest income $ 841
=====
Net yield on earnings assets 4.55%
====
b. For the nine-month period ended September 30, 2003, non-interest income
amounted to $135,248, or .65% of average assets. By comparison, non-
interest income for the nine-month period ended September 30, 2002
amounted to $56,060, or .49% of average assets. The majority of the
increase was caused by the increase in transactional account volume.
c. For the nine-month period ended September 30, 2003, non-interest expense
amounted to $913,186, or 4.38% of average assets. By comparison, for the
nine-month period ended September 30, 2002, non-interest expense amounted
to $768,540, or 6.70% of average assets. On a percentage basis, the
decrease from 6.70% for the nine-month period ended September 30, 2002 to
4.38% for the nine-month period ended September 30, 2003 is significant.
This decrease is primarily due to the improvement of operational
efficiencies.
As of September 30, 2003, the allowance for loan losses amounted to
$287,245. As a percent of gross loans, the allowance for loan losses
amounted to 1.17%. Management considers the allowance for loan losses to
be adequate and sufficient to absorb possible future losses; however, there
can be no assurance that charge-offs in future periods will not exceed the
allowance for loan losses or that additional provisions to the allowance
will not be required.
The Company is not aware of any current recommendation by the
regulatory authorities which, if implemented, would have a material effect on
the Company's liquidity, capital resources, or results of operations.
The Company cautions readers of this report that such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the
Company to be materially different from those expressed or implied by
such forward-looking statements. Although the Company's management believes
that their expectations of future performance are based on reasonable
assumptions within the bounds of their knowledge of their business and
operations, there can be no assurance that actual results will not differ
materially from their expectations.
The Company's operating performance each quarter is subject to various
risks and uncertainties that are discussed in detail in the Company's filings
with the SEC, including the "Risk Factors" section of the Company's
Registration Statement (Registration No. 333-92653) as filed with the SEC
and declared effective on March 13, 2000.
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.
------------------------------------------
This item is not applicable.
Item 3. Controls And Procedures
-----------------------
The Company's Chief Executive Officer has evaluated the Company's
disclosure controls and procedures as of a date within 90 days prior to
the date of this filing, and concluded that these controls and procedures are
effective. There have been no significant changes in internal controls or in
other factors that could significantly affect these controls subsequent to
the date of this evaluation.
Disclosure controls and procedures are the Company's controls and other
procedures that are designed to ensure that information it is required to
disclose in the reports it files under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information the Company is required to disclose in the reports
that if files under the Exchange Act is accumulated and communicated to
management, including the principal executive and financial officers, as
appropriate, to allow timely decisions regarding required disclosure.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
There were no matters presented for a vote of the shareholders during
the three-month period ended September 30, 2003.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
---------------------------------
(a) Exhibits: The following exhibits are filed with this report.
Exhibit
Number Description
------- -----------
31.1 Certification Pursuant to Rule 13a-14(a), As Adopted
Pursuant to Section 302 of the Sarbanes-Oxley
Act Of 2002.
32.1 Certification Pursuant to 18 U.S.C. Section 1350 As
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act Of 2002.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed
during the quarter ended September 30, 2003.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
ISLANDS BANCORP
------------------------------------------
(Registrant)
Date: November 13, 2003 BY: /s/ William B. Gossett
----------------- --------------------------------
William B. Gossett
President and Chief Executive Officer
(principal executive and financial officer)